Understanding India’s Services Revolution

Abstract

A striking feature of India’s growth performance over the past decade has been the strength of the services sector. Table 10.1 shows that on average services grew more slowly than industry between 1951 and 1990.2 Growth of services picked up in the 1980s and further accelerated in the 1990s, when it averaged 7.5 percent per annum, thus providing a valuable prop to industry and agriculture, which grew on average by 5.8 percent and 3.1 percent, respectively.3 Most forecasters expect that services will grow at similar if not higher rates over the next few years. Growth in the services sector has also been less cyclical and more stable than the growth of industry and agriculture (in the sense of having the smallest coefficient of variation).

Keywords

Transportation Income Volatility Stim Sonal

We are grateful to Shankar Acharya, Martin Cerisola, Deepak Mishra, Ashoka Mody, Sudip Mohapatra, Uma Ramakrishnan, Michael Wattleworth, and Sanjay Hansda for helpful comments on this chapter. We would also like to thank Mr. Kolli from India’s Central Statistical Organization for his assistance with the data. Errors remain our own.